Health department financial plans ‘flawed'

30 October 2012The Department of Health has not estimated the size of the potential liabilities it is exposed to through PFI deals, a committee of MPs has warned.

The Commons public accounts committee added that the department was not clear on how it could ensure the finances are in place to meet any liabilities under the deed of safeguard, which is issued by the Health Secretary to effectively underwrite PFI deals signed by Foundation Trusts.

It has delivered a withering attack on the department’s handling of NHS trust finances and what happens when a trust goes bankrupt.

“The Department of Health could not explain to us how it will deal with an NHS trust that goes bankrupt,” said committee chair Margaret Hodge. “Nor could it provide reassurance that financial problems would not damage the quality of care or equality of access to all citizens.”

She added that the department was unable to explain what would trigger a trust being placed into the Regime for Unsustainable NHS Providers or how the process will work in practice – despite South London Healthcare NHS Trust already having been put into this regime.

“It very much looks like the department is inventing rules and processes on the hoof rather than anticipating problems and establishing risk protocols,” Hodge concluded.

The report follows the first draft report of the Special Administrator into South London Healthcare NHS Trust, which was published yesterday.